UAE: Insured individuals should plan retirement from start of their career, says authority

To ensure a secure and stable retirement and lifestyle, proactive planning well before retirement is crucial and should ideally start from the beginning of an insured individual’s career path.

The General Pension and Social Security Authority (GPSSA) emphasised this in their Get Ready - Proactive Financial Planning campaign. The campaign provides guidance for the public on how to plan their finances and highlights the importance of starting this process at the beginning of one's career path. The GPSSA stressed the significance of sufficient preparation, foresight, and time for retirement planning to avoid potential financial hardship in the future.

The GPSSA’s financial planning campaign is underway until July 30 and will offer tips, advice, and guidance on preparing for the pre-and post-retirement stages.

To ensure security and ongoing sustainability for insured individuals and their families, financial planning should begin the moment a person joins an entity since savings and income are highly dependent on one’s line of work and insurance coverage received as per the UAE Pension Law, which determines the type of benefits an insured individual receives upon retirement.

The reasons behind the need to proactively plan early in preparation for post-retirement period include changes in obligations, priorities, and source of income during an insured’s age span, in addition to lifestyle challenges, number of children and family requirements (which vary from one person to the other), as well as increased responsibilities over time. All factors require an insured individual to undergo financial preparations early and save for the longest duration possible.

Additionally, the GPSSA explained that insured individuals who spend less than 20 years in employment service and retire early under the perception of wanting to enjoy their lives free from obligations face huge challenges, such as a decrease in the retirement salary since their pension amounts to 70 percent of the average salary of the contribution account, which may result in disrupting the individuals plan.

The concept of saving from an early stage not only impacts the overall financial behaviour of a society which consequently brings out positive patterns for the economy, but it also supports an entire family’s financial returns in the short and long term, enhances their ability to make sound decisions and encourages future investment.

Lack of planning results in risky behaviour, such as reverting to loans and accumulating debts due to high-interest rates charged by banks. These factors impact a family socially and psychologically and can be avoided if savings are handled appropriately and wisely.

ayaz@khaleejtimes.com

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• UAE